ADVANCED FINANCIAL

REPORTING
Consolidation 02
Summary of IFRS 10- Consolidated Financial statements

Determination of Control
Parent and subsidiary have non-conterminous year ends
 Goodwill

Parent only
Parent + NCI shares
How to record Fair value in consolidated Financial statements
How to record Fair value in consolidated Financial statements

Internally generated assets i.e. Brand name are not recorded in

subsidiary’s FS but may be recorded in consolidation

Contingent liabilities= disclosed only but may be recorded as

liabilities in the consolidated FS if a value is assigned to them
Recorded vs. actual contingent consideration= Change in accounting estimate
Subsequent settlement of (contingent consideration in case of Equity)
Retained earnings
Share capital/ share premium
 Accounting treatment of issuance of shares in future as
part of purchase consideration
Example:
P ltd. has agreed to issue 100 shares of $1 (nominal and FV at
acquisition) after 3 years as part of purchase consideration. Then the
following entry will be recorded at acquisition.
Cost of investment 100
Capital reserves 100

This value will not be updated and after 3 years (at the time of issuance of
shares), the FV of shares in $1.5 per share. Entry at issuance of shares:
Retained earnings 50 (balancing figure)
Capital reserve 100
Share capital 100
Share premium 50
start of 1st year 0.75 18,000 Fin cost
end of 1st year 0.83 19,920 1,920
end of 2nd year 0.91 21,840 1,920
end of 3rd year 1 24,000 2,160
Total 6,000
Entry: Fin cost 1,920
def liab 1,920
Question
1 year after acquisition
Solution
2 yrs
After
Acq.
Solution
2 years
After
acquisition